| ONGC chairman Subir Raha in Mumbai on Monday. (AFP)
Mumbai, Feb. 23: The roadshow for the sale of 14.25 crore shares of Oil and Natural Gas Corporation — touted as the largest public offer in the history of the Indian capital markets — was flagged off today.
The offer from the Navratna PSU with the highest market capitalisation and low liquidity (only 3.8 per cent stake is held by the public) is expected to satiate the appetite of investors, especially foreign investors who are keen to invest in the oil sector.
“Ladies and gentlemen, the silver goes back to where it came from,” said Dhirendra Singh, secretary in the disinvestment ministry.
The government is divesting almost 10 per cent in ONGC, the largest oil and gas company in the country. A bulk of it would go to foreign investors who have the appetite and the resources to pick up sizeable quantities of the shares on offer. “With this flotation, we hope to direct the strength of the economy and we expect the capital markets to grow in tandem,” he added.
The ONGC offer is expected to surpass Reliance Petroleum’s, which raked in Rs 7,000 crore. Analysts expect the company to raise around Rs 9,000 crore to Rs 10,000 crore from the issue.
Post-issue, the oil major’s shares will be more freely traded on the bourses as the public holding would quadruple from 3.8 per cent to 13.8 per cent.
The book-built ONGC issue will open on March 5, and close on March 13. The price band for the issue will be announced a day prior to the opening date. ONGC shares today closed at Rs 718.90, down Rs 27.10 from Friday.
At present, the government holds 84.1 per cent of ONGC while almost 10 per cent is with Indian Oil Corporation. Gail owns a 2.4 per cent stake in the company.
To reassure investors and control the liquidity, the government has enforced a lock-in clause for Indian Oil and Gail which will bar them from selling their shares for the next six months. MRPL and ONGC shareholders and employees have been offered a preferential quota in the public offer.
“This is the company that is the energy security of the country. Investors cannot ignore it,” said Nimesh Kampani of J. M. Morgan Stanley, the lead manager of the issue.
“The largest equity offer will test the markets,” admitted Kampani. Merchant bankers, along with ONGC officials, have embarked on a roadshow that will provide a peak preview to stock brokers and analysts.
The roadshows will also be held in cities like Boston, New York, California and London. Major funds that are focussed on the petroleum sector have expressed keen interest in subscribing to the offer.